Over one-third of the struggling borrowers who received recast loan terms in the first quarter cut their monthly obligation by 20% or more.

We have the tools to address our housing challenges through a mix of regulatory reforms, policy changes, incentives and investment. What’s needed is the will and leadership to put those tools to work.

Millions of would-be borrowers are reportedly “doubling up” by sharing homes with nonrelatives, Zillow found.

Only So Many Ways to Say Sideways

It was an uneventful, boring, uninspiring, and unenlightening summertime Monday in the bond market–the kind that would have been put to far better use in the construction of another 3-day weekend.  But alas!  It happened (barely) and that leaves us with the unpleasant task of finding anything meaningful to observe.  Such days reduce the analysis to focusing on technicals and bigger picture themes.  On the technical front, 10s battled the 3.72% range floor yet again, but failed to maintain the breakout.  The bigger picture theme of “recession and disinflation” versus “a surprisingly persistent status quo” received no compelling new evidence today (which makes it easier to reconcile the flatness). 

Market Movement Recap

09:44 AM Stronger overnight, but weaker since 9am.  10yr down half a bp at 3.73.  MBS up 2 ticks, but down an eighth from AM highs.

01:46 PM Very flat after morning correction.  MBS up 2 ticks (0.06) and 10yr yield down 1.6bps on the day at 3.721.

03:44 PM Completely unchanged since the last update.  No relevant events or headlines.  

Here we are (still) with 30yr yields closer to 4% than 3%, economic growth softening, leading indicators pointing to further contraction, and inflation that’s (possibly) heading lower.  As such, we have all the makings for a bond market that should (possibly) be rallying. The implicit uncertainty in this scenario is playing out in the form of a supportive technical ceiling with low conviction heading back in the other direction.  AM trading brought another brief attempt to break below the 3.72% technical level, and another retreat in the 9am hour.  It’ll (possibly) happen soon though.

The average 30yr fixed mortgage rate has been holding just under 7% for the entire month, making June the least volatile month in well over a year.  An absence of volatility frequently speaks to indecision in the bond market (interest rates are based on bonds) and that’s a fair assessment at present. [volatilityindex] Bonds/rates move up and down in response to changes in the economy and inflation, among other things.  There’s a clear rhetorical stalemate between the two sides of the rate debate.  One side thinks inflation and economic resilience will be surprisingly persistent.  The other thinks recession (and more meaningful price declines) are imminent.   Without clarity on that debate, rates may keep struggling to embark on a directional journey.

How can it be that it’s been 14 years since Michael Jackson died of acute propofol intoxication? (A drug that is used for the induction and maintenance of general anesthesia.) The world certainly took notice of his death, and moving into mortgage banking, any time the same news story contains words like “FHFA,” “socialism,” “Congress,” and “credit scores” everyone takes notice. People are taking notice of bank and credit union performance in this environment. Unlike non-depository lenders, they’re faring okay in this environment. Personnel can be shifted to other channels within the company, such as auto loans, credit cards, or customer service. They generally have a different set of concerns than independent mortgage banks. For example, how does the referral process work, and who is compensated along the way? How are potential non-mortgage customers identified? How are marketing expenses handled… does the mortgage arm of the bank do its own marketing? How are management costs allocated? What is the reporting structure: who does “mortgage” report to and how? Are mortgage employees actively trained on other bank channels such as auto lending or credit card work? IMBs, of course, must compete with bank and CU comp structures which often involved a salary (let’s say, $5k per month) plus commissions (let’s say, 50 basis points). (Today’s podcast can be found here and is sponsored by Visio Lending. Visio is the nation’s premier lender for buy and hold investors with over 2.5 billion closed loans for single-family rental properties, including vacation rentals. Through its top-rated Broker Program, Visio brokers can earn up to 5 percent. Hear an interview with Black Knight’s Frank Poiesz on the current regulatory environment and what parts of the origination cycle AI will likely benefit first.)

With new construction activity at the highest level in more than a year, the Federal Reserve Bank of Atlanta’s GDPNow tracker is projecting residential investment added 0.1% to growth in gross domestic product in the second quarter.

The legislation has support among Republicans, who hold a slim majority in the chamber.

Two years after the Florida building collapse that prompted them, tighter “temporary” requirements may be doing more to ensure the structural integrity of buildings but they also intensify financial challenges.